US Department of Labor reaches settlement with Unum Life Insurance Co. to reform company practices on evidence of insurability

BOSTON – The U.S. Department of Labor today announced a settlement with Unum Life Insurance Co. of America that requires the Portland, Maine-based insurer to change how it administers its proof of good health requirement — referred to as evidence of insurability — for participants in job-based life insurance plans.  

The department’s Employee Benefits Security Administration investigated Unum’s administration of life insurance plans covered by the Employee Retirement Income Security Act. EBSA found the company often accepted premiums without verifying if participants were insurable, leaving participants and their beneficiaries to believe they had coverage. Investigators learned Unum often denied benefits claims after a plan participant died, claiming it never received proof of insurability. This left beneficiaries without the life insurance benefits their loved ones had paid for. 

“The U.S. Department of Labor will take appropriate action against any insurance company that collects regular premium payments from plan participants and later tries to wrongfully deny benefits based on technicalities like ‘insurability’ after the participant passes away,” said Regional Solicitor Maia Fisher in Boston.

EBSA’s investigation also revealed that Unum provided coverage to dependents in certain policies without evidence of insurability. However, if the dependent died within two years of the policy’s issuance, Unum would review their medical records to determine whether they were disabled from the time of enrollment until their death. If Unum found the dependent was disabled at the time of enrollment, it would then deny coverage, citing a delayed effective date of coverage. Unum did not clearly inform participants or dependents at enrollment that coverage would be delayed in these circumstances. 

The settlement prohibits Unum from denying benefits claims under an ERISA-governed group life insurance policy solely because of a lack of evidence of insurability when a plan participant has paid premiums for 90 days or more. In addition, the company must take steps to make changes to their delayed effective date of coverage for dependents more transparent to participants and policyholders.    

“People who pay life insurance premiums should feel secure that their beneficiaries will get the benefits for which they paid,” said Employee Benefits Security Administration Regional Director Carol Hamilton in Boston. “While Unum is changing its practices, we urge all insurers to examine their practices to ensure that they aren’t engaged in similar conduct.”

Unum has notified the department that it will voluntarily re-process claim denials based on lack of evidence of insurability from Jan. 1, 2018, to the present and claim denials based on the delayed effective date provision from July 1, 2016, to the present.

This settlement follows similar agreements the department reached with Prudential Insurance Co. in April 2023 United of Omaha Life Insurance Co. in September 2023, and Lincoln National Life Insurance Co. in May 2024. Investigations into other life insurance companies’ practices surrounding evidence of insurability are ongoing. 

EBSA’s Boston regional office conducted the department’s investigation and attorneys Suzanne Reilly and Celeste Moran, and ERISA Counsel Christine Collins of the Boston Regional Solicitor’s Office negotiated the settlement for the department.

Read the settlement agreement between the department and Unum Life Insurance Co. of America.